What Are The Steps To Filing A Chapter 13 Bankruptcy
Generally speaking, the initial process of filing a Chapter 13 bankruptcy is, more or less, similar to filing a Chapter 7 bankruptcy. It doesnât get much more complicated until you reach the point at which you have to properly calculate what your monthly Chapter 13 payments will be based on a number of different factors.
How Do I File For Chapter 13 Bankruptcy
You should consider hiring a lawyer who specializes in consumer bankruptcy to help you petition for Chapter 13 bankruptcy protection.
You will need to complete a series of official bankruptcy documents and submit a proposal for repaying your debts. A court-appointed bankruptcy trustee will review your plan, and contact your creditors, before approving a final repayment plan.
Your petition for Chapter 13 Bankruptcy must be filed at a U.S. Bankruptcy Court. There are more than 90 U.S. Bankruptcy courts in the U.S. Here’s how to find a local U.S. Bankruptcy Court.
What Documents Does The Trustee Need For My Meeting Of Creditors
Each Trustee has different required documents they will request in advance of your 341 Meeting. No matter your Trustee, they all will require your most recently filed Federal Tax Returns. Our office should already have a copy, but if not, we will need them as soon as possible so we can get the documents to the Trustee prior to the meeting. If you do not submit the documents at least 7 days before the scheduled meeting, the Trustee will reschedule. Our office will let you know what specific documents your Trustee requires in that initial email or letter you receive after filing.
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What Is A Chapter 13 Bankruptcy Discharge
After you follow a three- or five-year repayment plan under Chapter 13 you will be able to have certain remaining debts erased. Unsecured debts, such as credit card balances and medical debt are eligible for discharge under Chapter 13.
You must complete a financial counseling course to be eligible for discharge and must not have applied for a prior Chapter 13 bankruptcy discharge within the past two years.
In The Chapter 13 Bankruptcy Repayment Plan Your Debts Will Fall Into One Of Three Categories:
- Priority debts, which must be paid off during your plan. Those debts include back taxes and child and spousal support payments.
- Secured debts, which you usually must pay back in full. Examples of debt in this category include a home mortgage and a car loan.
- Unsecured debts, which in many cases arent paid in full by the end of the repayment plan. Instead, outstanding balances are discharged and voided by the court. These debts include personal loans, credit card debt, and medical bills.
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Why File For Chapter 11
The main reason to file for Chapter 11 bankruptcy is to be able to prevent a business from permanently closing. Of course, the company needs to be in such a position that the restructuring of its debt makes financial sense. By staying in business while reorganizing debt, the company has a fighting chance at solvency. The downsides are its expense and complexity. Smaller businesses often lacked the resources to use it.
Thats why the Small Business Reorganization Act of 2019, which went into effect on Feb. 19, 2020, added a new Subchapter 5 to Chapter 11 designed to make bankruptcy easier for small businesses. The act defines them as entities with less than about $2.7 million in debts that also meet other criteria, according to the U.S. Department of Justice, and it imposes shorter deadlines for completing the bankruptcy process, allows for greater flexibility in negotiating restructuring plans with creditors, and provides for a private trustee who will work with the small business debtor and its creditors to facilitate the development of a consensual plan of reorganization.
Determining Whether To File Chapter 13 Bankruptcy
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When A Second Filing Might Be Beneficial Even Without A Discharge
Sometimes you donât need a dischargeyou need time to pay off a debt. For instance, suppose that you owed federal taxes that you couldnât discharge in bankruptcy, and you could not work out a reasonable payment plan. Rather than have your wages garnished, you could file for Chapter 13 bankruptcy and stretch out the payments over a five-year Chapter 13 bankruptcy payment plan.
A similar approach is to file a Chapter 13 case immediately after receiving a Chapter 7 discharge . Again, all you might need is time to pay off nondischargeable debts, such as domestic support arrearagesnot a discharge.
However, not all courts allow the process, and it can be tricky to qualify for a Chapter 7 bankruptcy and then demonstrate that you have sufficient available income to pay into a Chapter 13 plan. Itâs possible, though, after taking into account the debts wiped out. In any case, it would be wise to consult with a local bankruptcy lawyer before attempting to go this route.
Should I File Chapter 13 Or Chapter 7
by Team West
Due to the recent economic crisis, many Georgians have found themselves in the situation where their income is not keeping pace with their bills, with the result that they are unable, or it is very difficult for them, to pay their debts. From credit card bills to medical expenses to everyday costs such as mortgages, car payments, food, and other essentials, more and more Georgian residents are turning to bankruptcy as their solution to become debt-free and more financially secure. While filing for bankruptcy can achieve these goals, it may also carry with it long-lasting consequences that people should be aware of before they begin the process.
Before embarking on the bankruptcy process, it is important to first decide which type of bankruptcy best suits your needs. Individuals are eligible to file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.
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Keep Up With Your Chapter 13 Plan Payments
Woohoo! The hard part is over! Congratulations on getting your Chapter 13 plan approved! Now youâll need to continue making your monthly plan payments for the next 3 to 5 years before your case successfully concludes and your discharge can be entered.
The first payment is due within 30 days after you file your bankruptcy forms. Keep in mind that up until your case is confirmed, your monthly plan payments can increase or decrease. If you fall behind on your payments and are unable to catch up within a reasonable amount of time, your case will be dismissed and you will not receive a discharge.
File The Chapter 13 Bankruptcy Petition
After youve finished filling out and reviewing your bankruptcy paperwork, print it off, sign the signature pages, and present it to court. Along with your printed bankruptcy paperwork, dont forget to send your credit counseling certificate.
A Chapter 13 case requires a filing fee of $313. When you go to file your paperwork, youll have to pay the whole sum to the court. When filing a Chapter 13 case, unlike a Chapter 7, there is no cost waiver alternative. Make certain you print the precise number of copies required by your local bankruptcy court. Before filing for bankruptcy, visit your local bankruptcy court to find out how many copies youll need.
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How Chapter 13 Can Affect Your Credit
Bankruptcy can hurt your credit score, but the extent of its impact depends on your overall credit profile.
If a borrower has a high credit score and clean credit profile, they could see a large dip in their score. However, if the borrower has quite a few dings on their credit profile, their credit score may only drop a bit since their score is probably already pretty low.
You can expect a Chapter 13 bankruptcy to remain on your credit report for up to seven years from the date filed. Thats three years fewer than a Chapter 7 bankruptcy because youll repay a portion of your debts under the Chapter 13 repayment plan.
During that seven-year waiting period, you can begin rebuilding your credit. The bankruptcys negative impact on your score will lessen over time. In fact, you may be able to qualify for a conventional mortgage as little as two years from the discharge date of a Chapter 13 bankruptcy or four years from the dismissal date.
Can I Qualify For Chapter 13 Bankruptcy
To be eligible for a Chapter 13 bankruptcy repayment plan you must have:
- Regular income.
- Total unsecured debts under $394,725. Unsecured is a debt that is not backed by collateral, such as a car or home. Credit card and medical debt are unsecured debts.
- Total secured debt under $1,184,200. Secured debt is a loan where you have pledged an asset as collateral. Your home is the collateral for a mortgage. A car is a collateral for an auto loan.
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Reasons To File For Chapter 13
The main reason for an individual to file for Chapter 13 bankruptcy is to prevent the liquidation of all their assets. In particular, it is frequently used to avoid the forced sale of an individuals home, which Chapter 7 cant do. Chapter 11 may also prevent a forced home sale, but is usually too expensive and complicated a procedure for most people. Of course, not everyone has the choice to use Chapter 13. Having a stable income is a crucial qualifier, and there is that debt limit of $2.7 million as well.
Chapter 13 Bankruptcy And Credit Card Debt
Are you a high income earner with large amounts of credit card debt? You may have put off filing for bankruptcy because you dont qualify for Chapter 7, and you fear you wont be able to repay your credit card debts under the structured repayment plans of Chapter 13.
The good news is, while Chapter 13 is based on structured repayments, you are still eligible for an automatic stay, which means your debts will be frozen so they cannot increase. Chapter 13 sorts debts into three types: secured debts, unsecured debts, and general unsecured debts. Under Chapter 13, some debts are repaid in full, others in part, and some not at all, depending on their priority level.
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Bankruptcies Can Be Revoked Seek Legal Advice
Bankruptcy courts have the right to revoke a bankruptcy or discharge. There are specific conditions for the various types of bankruptcy. Chapters 7, 11, 12 and 13 all have their own unique reasons for why they can be revoked.
Revocation of Chapter 7
A trustee, creditor, or the U.S. trustee may submit a request to the bankruptcy court that a discharge or bankruptcy be revoke based on an allegation against the debtor.
Explanations of the Reasons Bankruptcies Can Be Revoked:
If you are considering filing for bankruptcy again, then you should take advice. Youll need to file with the court and must be certain that you are filing correctly and discharges are applicable.
You should also be aware of the With Prejudice rulings, and how they affect your ability to file for bankruptcy.
AllLaw has excellent resources online to help you navigate this tricky legal procedure. They have an interactive calculator that can help you establish the best next step based on the amount of money you owe. Their resource also clearly and simply explains the various types of bankruptcy and what you can do if the court has dismissed a previous case with prejudice.
How Much Do You Pay Back In Chapter 13
When following your Chapter 13 bankruptcy payment plan, youll be required to make regular payments for three to five years, depending on your income. If you make on-time payments for the duration of your plan, the rest of your debt will be discharged at the end of the term. If you opt to pay your debts off early, you may be required to pay the entirety of the debt you claimed in your bankruptcy case and youll have to get permission from the court.
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Let An Expert Bankruptcy Attorney Handle It
Having made thousands of courtroom appearances our Kansas City bankruptcy lawyers are equipped to handle the most complex cases, both personal and small business.
Weve facilitated so many bankruptcy cases that weve learned how to get the job done quickly, effectively and honorably. Experience will be your greatest ally in your bankruptcy case. At Kentner Wyatt, LLC our experience is at your full disposal.
The Process For Filing Chapter 13
People who qualify for Chapter 13 bankruptcy can file a petition with the bankruptcy court in their district to get bankruptcy relief from their debts. A court-appointed trustee will then review the information submitted by the debtor, which includes the debtors:
- Assets, e.g., home equity or vehicle value
- Liabilities, e.g., credit card debts or personal loans
- Expenditures, e.g., mortgage payments and other bills
- Certain questions about their financial history
Also, there are certain actions that must be done before an individual can file for Chapter 13 bankruptcy, such as completing a credit counseling course from an approved agency. If you have not begun preparations, our team can guide you so that your case is successful.
For a legal consultation, call
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Previously Filed Chapter 13 And Filing Chapter 13 Again
If you received a discharge in Chapter 13, you will need to wait two years from the date you filed that case before you can file another Chapter 13 and receive a discharge. It usually takes three to five years for the repayment plan in a Chapter 13 to be discharged. Because of this, once your first Chapter 13 is closed, you can immediately be eligible for discharge in a second Chapter 13 filing.
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You Are Not A Business Entity
Only individuals and those filing jointly as spouses can file for Chapter 13 bankruptcy. For instance, businesses that are corporations and limited liability companies are ineligible for Chapter 13 and must instead file for Chapter 11 bankruptcy.
While a business owner can’t file in the name of the business, if you own the business as a sole proprietor or with a partner, you can file in your name for the debts you are personally liable for. Stockbrokers and commodity brokers, however, are ineligible for Chapter 13.
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How To File Chapter 13 Bankruptcy
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Chapter 13 bankruptcy lets you restructure overwhelming debts under the protection of a federal court, setting up a repayment period of three to five years.
This is also called wage earners bankruptcy, because you must have a regular income to qualify. The goal is to resolve some debts and get current on secured loans those with collateral, such as a home or car. Here’s how to figure out if Chapter 13 bankruptcy is right for you and how to file.
Who Can Declare Chapter 13 Bankruptcy
Not everyone is eligible for Chapter 13 bankruptcy. To qualify, you must meet several legal and practical requirements.
Applicants must be individuals, not businesses
To qualify for Chapter 13, you must do so as an individual.
Corporations are not eligible, but sole proprietors are, says Jen Lee, a debt and credit attorney in San Ramon, Calif.
No recent bankruptcy discharges
If you discharged debt in a Chapter 13 bankruptcy within the last two years or in a Chapter 7, 11 or 12 bankruptcy within the last four years, you are ineligible for Chapter 13 bankruptcy until the waiting period has expired.
Previous bankruptcy case not dismissed
If a prior bankruptcy petition was dismissed within the past 180 days because you either violated a court order to appear before the court or you requested that the court dismiss your case, youll need to wait until the 180-day time frame has elapsed.
Must fulfill credit counseling requirement
Any individuals who file for bankruptcy are required to receive credit counseling from an approved agency within a 180-day period before filing a bankruptcy petition.
Total debt within limits
An individual must have unsecured debts of less than $465,275 and secured debts of less than $1,395,875. Unsecured debts are those not backed by an underlying asset . Secured debt is backed by an asset or collateral . These amounts are periodically adjusted to reflect fluctuations in the consumer price index.
Must be current on income taxes
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